Precision Production

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-By John Boley

Milspec Manufacturing is a precision engineering company engaged in the contract manufacture of military, industrial and commercial products. Customers include Australian and international defence agencies, together with organisations in rail, utilities, mining, telecommunication and infrastructure sectors. In fact the company is proud to list, amongst its impressive customer list, the likes of the Australian Department of Defence, BAE Systems Australia, Thales Australia, United Group Infrastructure, Bombardier Transportation Australia and Navistar Defense, to name a few.

Located in Albury/Wodonga, one of Australia’s largest inland regional centres, Milspec Manufacturing employs around 60 staff. Exports comprise about 10 per cent of the business but the majority of customers are either Melbourne or Sydney based.

Milspec has a long history dating back to the 1950s, with the current site, which many people in the industry will remember, later becoming Australian Defence Industries (ADI). At the time ADI was solely involved in the production of live-fire target systems which, in the day, revolutionised marksmanship training. In fact the current systems are used in most Australian Defence training facilities and many more internationally.

At the time, in April 2002, the then ADI (now Thales) was privatised, but given that the Albury site had been so poorly managed for a number of years the decision was made to offload the business. Unfortunately there was little interest. Eventually a deal was done with Polytronic, a Swiss company, for the intellectual property, with the intent of closing the factory doors.

David Cooper, Milspec’s current Managing Director, then Production Manager, was of the opinion that the company deserved far better than unemployment in uncertain times, and took the decision to buy the equipment and employ all of the manufacturing staff. The vision was a small engineering firm employing about a dozen staff; however, with continued support from Polytronic, the company took on about 20 people and grew to what it is today. Milspec is very much a family focussed business, in which David’s wife, Wendy, the Commercial Director, is also significantly involved.

David’s background is as a mechanical engineer although he started his working life as a draftsman. In his own words, “Thirteen years of night school and twenty years of design work on anything from heating units, commercial lawn mowers, commercial refrigeration units, telecommunications equipment, even trains like the XPT. In fact if someone was to dig deep enough into the archives you might find about a dozen Australian Design Awards with my name included in the team.”

In 2006 Milspec expanded its capability by buying the prominent local sheet metal company, KG Sheet Metal and the firm now covers all facets of metal fabrication, from sheet metal to machined components for aerospace. Milspec takes this a step further than your usual engineering firm, with electronics experience from ADI days, by incorporating complex electromechanical assemblies and sophisticated electronics. The company is also a leading supplier of high reliability cabling and wiring harnesses and power distribution systems for the defence and transport industries, offering solutions for military equipment, special purpose vehicles and rail control systems.

What makes Milspec unique is that it can manufacture, finish and test just about anything under one roof. The company’s full lifecycle, integrated approach, from research and development, to prototyping, through full production, testing and the integration of this turnkey solution, along with a project management team, sets Milspec Manufacturing apart.

Central to the company’s ethos has been a philosophy of continuous improvement and investment in its people, striving to be an employer of choice. It is so for a number of factors, operating a lean operation and culture of continuous improvement and paying above the award wage to attract and retain the best possible skills. Milspec also offers some of the best and highest funded training programs in the region, accessing state and federal assisted programs to do so.

As David admits, “embarking on the lean journey some four years ago has not been without its many challenges and uphill battles, but it has made us much smarter, more efficient and has embedded a culture of safety and improvement. In fact over the last four years we have virtually doubled our production with the same resources. That speaks volumes and has set a platform for the next decade. It also affords us the opportunity to engage with many of the big prime players.”

Ongoing relationships are key to any successful business and one of which Milspec is particularly proud is that with BAE Systems. Milspec manufactures the canister and refurbishes the launchers for the Nulka program. Nulka is used by almost all Allied navies and is an active missile decoy, providing warships with a highly effective defence against anti-ship missiles. This is a long standing contract and represents a relationship which BAE itself holds up as an example of one of its best supplier relationships.

Another highly successful product which has been developed by Milspec itself, is its brushless alternator. There are a few variants, but the 300 amp version has the highest output for its size and type in the market and meets military standards. This alternator is used by Thales in all the in-service Bushmaster vehicles, as well as Navistar in the US in the MXT vehicle. While historically this has been a military product, it is making some headway commercially, in particular in the mining sector.

The contract manufacturing process has its advantages, says David. “At Milspec we typically build to print, i.e. a company or individual will come to us with a ready-made design and we manufacture/assemble the product according to exact specification. We may in some instances suggest changes to the design, given that at Milspec we do have a significant design capability, but also that we understand the manufacturing process.

“Many industries utilise the contract manufacturing process, especially aerospace, defence and transport, in particular the rail sector, and these are the industry sectors in which we are most heavily involved. These days there is an increasing trend for companies to outsource part or all of their production to manufacturers such as ourselves. For smaller companies they often don’t possess the expertise, technology, equipment and manpower to manufacture their product and that’s where we can help. We can assist right from inception, through design, prototyping, testing and full production.”

A prime example of this has been a product called Key Monitor Systems, which was originally conceived by a local Albury locksmith. When approached with the design, the initial concept was excellent, however Milspec engineers could see many possible improvements, both in functionality and production method. With Milspec’s assistance the product is now the best of its kind, selling nationally, with increasing interest overseas.

For larger companies like the big defence primes such as BAE Systems or Thales it’s a function of rationalising their core competencies and strengths. They are exceptional at system integration and are then able to draw on a much wider range of specific expertise by utilising contract manufacturers such as Milspec.

In other instances in particularly busy times or when under demanding delivery schedules, companies may utilise Milspec to supplement their own production. This is where Milspec’s quality system is paramount and the customer is assured of the best possible end product. The benefits of utilising Milspec as a contract manufacturer are many but the key elements are:

  • Cost Savings – Companies save because they do not have to pay for a facility and the equipment needed for production. They can also save on labor costs such as wages, training and benefits.
  • Mutual Benefit to Contract Site – A contract between the manufacturer and the company it’s producing for may last several years. The manufacturer will know that it will have a steady flow of business until then.
  • Advanced Skills – Companies can take advantage of skills that they may not possess. Similarly the manufacturer will have relationships formed with raw material suppliers and methods of efficiency within their production.
  • Quality – Milspec has an advanced quality management system.
  • Focus – Companies can focus on their core competencies better if they can hand off base production to an outside company.
  • Economies of Scale – Contract manufacturers have multiple customers that they produce for. Because they are servicing multiple customers, they can offer reduced costs in acquiring raw materials by benefiting from economies of scale.

There are of course certain additional considerations, such as who owns the intellectual property and sharing of sensitive information. These are all carefully addressed and comprehensively covered at the outset of any relationship together with extensive contractual obligations.

Milspec also has the distinction of being a Defence Strategic supplier and with this, security clearance as well. This has to be taken extremely seriously and confidentiality is of paramount importance.

Because of the diverse nature of Milspec’s offering it doesn’t lend itself to high volume production. The company often manufactures one-offs and prototypes. Although some of its CNC machinery is slightly older than you might expect, as David would say, “the skill is in the operator.” Similarly, often the only advantage to newer machines is not the precision, but purely the speed at which they operate. High volume is not the space in which Milspec operates and therefore the company is served well by its existing equipment and highly skilled workforce. Milspec prides itself in the precision and quality of its work and testimony to that are its ISO and AS9100 accreditations.

The AS9100 accreditation has been a significant milestone in Milspec’s development; it is one of the few Australian organisations to achieve this. It now paves the path to make serious inroads in the Aerospace sector and attract business in the global supply chains of the likes of Boeing and Lockheed Martin. It also adds to Australia’s inland capability when looking at international projects like the Joint Strike Fighter.

Aside from this, Chris Lyon, Milspec’s QA manager, acknowledges that AS9100 provides the framework for a fundamental business model. It’s the foundation upon which to build a competitive, customer-centric enterprise. “If you think it’s just another standard that can be taken lightly, think again. AS9100 makes a strong business case that translates to improved business results and a sustainable competitive advantage.”

Exporting – and fighting off imports in a strong-dollar environment – remains vital, says David. “With such a strong Australian dollar some of our exports, particularly to the US, have come under serious pressure. Not so much in our customers sourcing alternative suppliers but in negotiating hard on price. That in turn requires us to manufacture much smarter and efficiently to remain competitive.

“Similarly the likes of China are a major threat as they can manufacture at a fraction of the price, but that is typically high volume mass production and a market we are consciously not in. It is about quality and precision of product coupled with an ongoing partnership. To take that a step further, Milspec is proudly 100 per cent Australian and believes strongly in supporting Australian industry. We have a network of trusted suppliers who are all based in Australia and have fostered these relationships over many years to ensure the best possible service, supply and terms.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

September 20, 2018, 5:30 AM AEST